In his book Ultimate Guide to Pay-Per-Click Advertising, internet marketing expert Richard Stokes helps you master advanced search engine strategies from top search engine marketers to increase your sales. In this edited excerpt, the author offers three tips for increasing that all-important clickthrough rate.

Clickthrough rate lies at the very heart of the algorithms the search engines use to determine which ads get shown and which don't. While most search marketers typically have a vague understanding that clickthrough rate increases as an ad moves higher up on the search results page, the whole concept is shrouded in mystery.

Why is clickthrough rate so important? Outside of coverage (impression share), clickthrough rate is likely the most important metric you need to track in your campaigns. The formula to calculate is simple:

Clickthrough rate = clicks divided by impressions

For example, if one of your ads received 1,500 impressions and generated 35 clicks, then your clickthrough rate is 2.33 percent. Pretty respectable!

As you can see, clickthrough rate measures the amount of traffic any particular ad (or your campaign as a whole) is driving to your website. It merits your attention for this reason alone.

So how can you improve your clickthrough rates? Here are three ideas:

1. Improve the position of your ads. In conversion optimization, an important principle is that things that are seen immediately upon page load are more likely to catch the user's attention. In contrast, page elements that the user needs to scroll to see (things that are "below the page fold") are far less likely to receive attention.

The same holds true on the search engine results page, and it explains why the position of your ads determines your clickthrough rate. The higher an ad appears on the search results pages, the more clicks it will receive. That's because users spend more time focused on ads at the top of the page -- fully 90 percent of searchers viewed premium ads as opposed to somewhere between 28 and 21 percent who looked at the side ads. Furthermore, users spent more time reading the top ads (0.9 to 0.7 seconds each vs. 0.16 to 0.11 seconds on the right rail). It therefore pays to do what you can to get premium ad placement - the investment could be worth it.  

2. Keep your ad copy and keyword phrases similar. While many search marketers know that the closer the similarity of your ad copy to the searcher's keyword phrase, the higher the clickthrough rate, few realize that ad copy plays an even more important role than the position or price of your ads!

Exactly what effect does optimized ad copy have on clickthrough rates? The lift on clickthrough rate for a broad keyword is profound. In premium positions, the clickthrough rate go up as much as 160 percent. This increase held for ads at the bottom of the search results pages as well. The typical clickthrough rate for those ads was as much as three times higher.

3. Choose low-competition keyword phrases. An underappreciated factor that affects clickthrough rate is the degree of competitive bidding for the search phrase. This can be measured in a number of ways, including:

  • Actual number of advertisers bidding on the term
  • The estimated cost per click for the top ad position
  • The competition level as reported by the search engines
  • The number of words in the phrase

In one study, the clickthrough rate for high-competition terms ranged from 0.30 percent to 3.90 percent while the clickthrough rates for low-competition phrases ranged from 0.43 percent to 4.34 percent. This represents clickthrough rate improvements over high-competition terms of 11 percent and 43 percent, respectively.

Two important conclusions can be drawn from this data. First, it's much better to target a larger number of specific search phrases in your campaigns than just a handful of broad terms. The level of competition will be much lower, and as a result, you'll get a much bigger bite of the apple.

Second, the benefits of niche keyword targeting are typically higher for advertisers appearing in low positions than for those advertisers who appear in high positions. So if you can't afford to bid as much as your competitors, it's important that you find less competitive keywords to target.

This is why it's important to spend so much time in the planning phase of your campaign finding longer, more specific keyword phrases. If you do this, your campaign will drive a higher overall clickthrough rate right out of the gate.